The Orange County city may lay off half of its workers. The GOP sees it as a local 'ground zero' in efforts to curb the collective bargaining powers of public employees.

At a recent talk to a roomful of "tea party" supporters, Orange County Republican Party chairman Scott Baugh excitedly described how the next big GOP movement could be taking root in their own backyard.

In Costa Mesa, home to South Coast Plaza and the Orange County Performing Arts Center, the City Council has proposed cutting its workforce in half and outsourcing many of those jobs to private contractors.

The radical cutbacks are being led by new councilman and longtime GOP activist Jim Righeimer, who says the layoffs are necessary to deal with rising government pension costs for employees.

But Baugh and other Republicans see Costa Mesa as the beginning of something bigger. They hope other cities around California that are dealing with rising pension costs will take the same action.

On blogs and in speeches, local Republicans are framing it as a historic struggle against what they call "Obama's union bosses." On its website, OCGOP.org, the party urges other cities in Orange County to "stop the taxpayer rip-off." Officials are urging other Republican council members to take similar stands.

The rhetoric is similar to that used by the GOP in Indiana and Wisconsin, where Republican governors have been battling to roll back the collective bargaining powers of state employee unions. The GOP is hoping to use public pensions as an issue against President Obama and the Democrats in the 2012 election. And the push in Orange County takes the battle to the municipal government level.

"Costa Mesa is ground zero for cities," Baugh said.

It remains to be seen how far the GOP can spread the Costa Mesa labor fight. Cities around California are struggling with budget problems fueled at least in part by rising pension costs. But no others have proposed the dramatic cuts embraced by Costa Mesa.

Still, political analysts say the recession has left many government agencies with no choice other than to trim labor costs, even in cities where unions hold great sway.

There are estimates that state pension funds alone could eventually face a $1-trillion to $3-trillion shortfall for retirement benefits. San Diego officials have warned that pension payments could consume half the city's annual budget by 2025.

In Costa Mesa, this year's pension tab is $15 million of the city's $93-million budget. City officials say they expect pension costs to grow to more than $25 million within five years.

Polls show strong public support for changes in government workers' benefit structure. In April, a Los Angeles Times/USC College of Letters, Arts and Sciences poll found that seven in 10 people support a cap on pensions for current and future public employees. Nearly as many, 68%, approved of raising the amount of money government workers should be required to contribute to their retirement, and 52% supported raising the retirement age for government workers. And in a recession-battered and post-Bell political environment, emotions are running even higher, said Dan Schnur, director of USC's Unruh Institute of Politics.

"You've got a Democratic governor and the mayor of Los Angeles, a former union organizer, calling for changes," Schnur said. "This isn't just an Orange County Republican issue anymore.... The challenge for their opponents is to convince voters that these types of cuts would directly affect their daily lives. It's too early to tell whether that's going to be successful or not."

Several Southern California cities are facing major cutbacks. Struggling Compton announced this week that it could layoff up to a fifth of its workforce. But Costa Mesa's cuts have come with a distinct political edge, leading some to say politicians are using the belt-tightening to score political points for Republicans.

Organized labor is definitely taking notice, pouring hundreds of thousands of dollars into the battle in Costa Mesa.

The Orange County Employees Assn. is holding rallies, filling council meetings with speakers and backing a community group called Repair Costa Mesa. The group regularly runs local cable TV ads attacking the council's Republican majority and issues press releases challenging every dollar the council spends.

"Everyone in the labor community is very concerned about what appears to be a strategy to eliminate collective bargaining by essentially dismantling cities and selling them off to cronies and friends and contractors," said association chief Nick Berardino. "There are dire consequences when services go to the cheapest bidder and to folks with no accountability to the citizens of Costa Mesa."

Union leaders say the council is picking a fight that is based on ideology, not necessity. Costa Mesa workers have already agreed to cut pensions for new workers and are paying more toward their retirement funds, they say. But city leaders seem intent on making a public statement, they charge.